Thai rice prices hit 2-month high on demand surge from Brazil, Mexico

Thailand’s rice prices have swelled to a two-month high on the back of an abrupt demand surge from Brazil and Mexico, market sources told S&P Global Commodity Insights May 16, which is likely to support prices in Southeast Asia in the coming days.

Thai Grade B rice is currently being exported to Brazil and Mexico, according to a Thailand-based trade source. Shipments to Brazil are expected to arrive through the ports of Santos and Paranagua, with prices quoted in the range of $580-$600/mt FOB, the source said.

Confirming this demand hike from the Americas, a Dubai-based trader said, “Brazil and Mexico are now driving Thai prices.”

This demand-led bullish tone in the market was evident in the price assessment on May 16.

Platts assessed Thai 5% broken white rice FOB at $616/mt FOB and 100% Grade B white rice at $626/mt FOB on May 16, marking over a two-month high for both varieties, showed Commodity Insights data.

One of the world’s top 10 rice producers — Brazil — typically harvests 7 million mt of paddy and imports nearly 1 million mt every year, mostly from Paraguay, Uruguay, Argentina, Italy and Portugal. But the devastating floods this year at the peak of the harvest season are likely to have a big say in the country’s rice demand in the coming months.

The floods have ravaged Rio Grande do Sul’s rice fields since late April, sources said. The southern state accounts for nearly 70% of Brazil’s rice harvest.

Although a large portion of the paddy has been harvested, there are risks of a complete loss of unharvested crop and the simultaneous deterioration in the quality of the harvested stock.

Brazil is in a really bad state due to devastating floods, with crop damage risk seen at almost 10%-20%, a Thailand-based trader said. There are reports of some major grain trading companies shipping 100,000 mt of Thai Grade B rice to Brazil, with deliveries scheduled for May and June, he added.

There are expectations that Brazil will likely import an additional 1 million mt of rice in 2024 to feed its burgeoning population of 215 million, market sources said.

With Mexico also in the fray, Southeast Asian rice prices are seen to be bullish in the coming months, the sources said.

“Nearly 30,000-40,000 mt of Thai Grade B rice is also moving to Mexico from Thailand,” another Thailand-based source said.

Mexico usually imports rice from the US and Brazil. However, with Brazilian supplies shrouded in uncertainty this year, Mexico is looking for alternative options such as Thailand.

Thailand’s rice prices have also been boosted by the latest tender announcement of 2024 by Indonesia’s state-owned purchasing agency Bulog.

On May 11, Bulog announced a new tender to purchase 300,000 mt of 5% broken white rice, with Thailand expected to supply 90,000 mt.

The deadline for bidding on the tender was May 14, with the requirement that the rice be from the 2022-23 (July-June) crop year and milled no later than six months, according to Bulog’s announcement.

With the latest tender release, Indonesia has so far issued five tenders in 2024, importing 1.7 million mt of rice with Vietnam and Thailand supplying the bulk of the purchases.

The world’s fifth-largest rice supplier, Thailand is forecast to produce 20 million mt of rice in calendar year 2024, down 4% on the year amid dry weather, and export 8.4 million mt, steady on the year on the assumption that India relaxes its trade restrictions, according to Commodity Insights.

Tags: Market, demand, импорт, Brazil, prices, rice, Mexico, Thailand, crop